Can you explain what the point of a DAF is?
It seems like a way to get a 3rd party and some fees involved in the process of giving away your money. How does this do anything other than give some money to Vanguard?
I donate roughly 10% of my income annually. I do this every other year, and take the standard deduction the other years. So I donate roughly 20% every other year.
I can donate stocks or cash. If I donate stocks, I can buy a similar but different stock fund and increase my basis. The tax I would pay on my gains is then not owed.
When the stock market drops significantly, like in December, I can sell my stocks I bought at a higher basis, and deduct the losses. Then I can buy a slightly different fund immediately.
So you harvest some gains into your DAF, and your losses are harvested to decrease tax burden.
Last year was a donation year for me from a tax standpoint, I initially had almost no money in my DAF that I could give to the actual places I donate. By September I had put the amount I wanted to donate for the 2 years in there, and distributed ~1/2 to the charities I wanted.
I also increased my basis by ~20% rather than donating cash, and now have this years donations sitting there awaiting actual deployment. One could just donate the stock, but if you wait, and end up in a December like last year, you don’t get as much bang for your buck as doing it when you know you have had some appreciation.
In the end it is a way to give a little more to charity, and is only really worth it if you give larger amounts. For me, some of the charities I give to aren’t the best at budgeting for lumpy donations and I feel they do better when given consistent smaller donations.